In 2023, the state of the U.S. economy can be aptly summarized with the headline “Uncertainty Prevails.”
External forces have created a challenging economy and environment for sales teams to succeed. The current inflationary market leaves companies with two difficult options: absorb or mitigate inflationary costs on the supplier side or pass rising costs along to customers. Either way, the subsequent pressure on price requires sales leaders to find more creative ways to build successful deals and enhance deal profitability.
A hypercompetitive marketplace exaggerates this pressure, making it imperative that sales teams truly understand their differentiating factors. Budgetary cuts are another obstacle, driving the unplanned or unforeseen reduction of force and resources. Now, sales teams must be more efficient with the resources they do have.
Challenging economies raise the stakes, making missteps in deals more costly than ever. What can sales leaders do to build and close successful deals in the face of these changes?
Today’s sales operations must prioritize building long-term customer relationships in addition to the necessary sales function of acquiring new customers. Acquiring new customers costs six times as much as retaining existing customers, making retention an essential component of any organization’s sales strategy. Retention becomes even more vital during challenging economies.
Here are seven strategies that support the dynamic aspects of every sales negotiation and build positive long-term relationships with customers:
1. Plan Everything
Sales professionals must anticipate and plan every aspect of a negotiation cycle. Experienced sales professionals know that sales and decisions made in challenging economies are often made by committees – on both sides of the table.
Group negotiating dynamics inevitably add complexity. Planning starts with knowing when to introduce the right information at the right time to the right people. Research to identify the other party’s champions, influencers, and decision-makers is a fundamental step in building successful long-term customer relationships in this economy.
Planning should also evaluate and balance your own team’s individual strategies. Sales leaders should have a plan for how legal, finance, sales, and customer support all work together to support customer relationships and close profitable deals.
Has your company gone through a reorganization or reduction of force? Now is the time to evaluate your own organization’s changing group dynamics and ensure you have access to the resources you need if decision-makers have changed. You must be aware of any constraints on your own side that might slow down a deal.
Once you have a plan in place, you can begin executing the remaining strategies.
2. Know How to Position Your Product or Service
In challenging markets, sales leaders need to be intensely curious and vigilant to avoid falling into the Commodity Box. The best sales negotiators avoid this trap by asking the right questions to understand the customer’s needs. In fact, skilled negotiators ask 2.5x more questions and use half as much data compared to their average counterparts.
Fact-finding is also a crucial step in the relationship-building process. One of the biggest mistakes a sales professional can make is to make assumptions.
Learn why your customer needs your product or service and build a positioning theme that clearly demonstrates your value. You can’t position your product unless you know what’s of high value to the other party. You can’t build trust, respect, and credibility without expressing sincere interest. A standard elevator pitch won’t advance a positive long-term relationship.
Fact-finding can also shorten the sales cycle by getting the right person to the table, finding the influencer, and reaching decision-makers faster. As noted previously, decisions in challenging economies are more often made by committees so your positioning needs to account for multiple decision-makers.
During an inflationary market, passing on costs to consumers must be balanced against maintaining and enhancing customer relationships. When you know what’s compelling to your customer, you can create a high-value positioning statement that isn’t solely focused on lower prices.
3. Set the Right Targets
Those who ask for more get more. Those who ask for less get less.
At the same time, setting the right targets isn’t about wringing every last dollar out of your customers, and your targets shouldn’t always be about price.
Non-price items like favorable contract language or schedule flexibility can be just as important to a successful negotiation that builds a long-term relationship. Timelines, service levels, access to information, introductions to key people… all of these things are on the table and negotiable.
Understanding how the negotiated targets serve both you and the other party today and in the future fosters better long-term relationships and ultimately successful deals for both parties.
4. Manage Information Skillfully
Information is a valuable resource. Sales leaders need to plan how they leverage and protect information. When you share information is as important as what information you share.
Sales leaders are wired to be collaborators with their negotiation counterparts. However, you must balance the ability to strategically provide information when it creates a competitive advantage for your side. At the same time, effective relationships should help you anticipate difficult questions and prepare effective responses.
Uncovering information and understanding your value to the other party is the most important way to set the foundation for a positive customer relationship.
5. Leverage Your Strength and Power
One of the biggest mistakes a novice negotiator will make is thinking the other side has all the power. A skilled negotiator will fully understand their strengths and powers relative to the other party.
In a challenging economy, this can constantly be in flux. Sales professionals can often underestimate their power and fail to see how pressures and broader economic impacts may constrain their customers too.
6. Satisfy Needs Over Wants
Focusing on relationship-building means that you’re in tune with what the other party needs out of a deal. This starts with planning and research to understand the other party’s objectives, metrics for success, and even the long-term strategy set by leadership. Understanding these things can help you communicate your considered and unconsidered values much faster.
The basics every sales leader should understand about the other party’s needs and wants are as simple as understanding why they are asking for what they are asking for and why they are asking for it today.
Wants are something obvious and specific. Think price, quantity, or a particular ask. Needs are subjective and less quantifiable. They are often the foundation that supports specific wants.
When structuring deals that reinforce long-term relationships, you should strive to know and meet needs over wants. Satisfying needs also opens the door for creative ways to build win-win agreements.
People are usually less likely to talk openly about their needs, so it takes skill, experience, and training to uncover this kind of information.
7. Execute a Proper Concessions Strategy
Concessions are critical to any good negotiation. Conceding according to plan is about leveraging a give-and-take mentality that values collaboration over competition. But don’t fall into the trap of asking for too much too soon or not asking for enough during the initial negotiation stages.
How you concede is important too. It’s another building block in your customer’s perception of your product or service as well as your long-term relationship and mutual respect.
Maximizing Value and Closing the Deal
Pain points in sales always exist, but they are particularly exaggerated in today’s economic environment.
Relationships are foundational to negotiating successful deals and mitigating the challenges of the current sales climate. One of the biggest mistakes in the early sales process is not knowing that you’re negotiating and building relationships from the get-go.
Sales leaders that understand the value of relationships in negotiation will see more competitive wins, more profitable deals, and more closed deals. This type of robust sales negotiation method is learned from expert sales training with clear processes that help ensure success during any economy.